Buying a Business

Also read: Choosing a Name | Start Up Costs | Start Up Finance

Buying a business is a huge step to take and a large proportion of people who search to buy a business never actually manage to complete a purchase. There are a lot of overpriced businesses listed for sale and a lot have problems. The amount of work and effort that has to go into the buying of a business can be overwhelming and you should prepare yourself for such undertakings. Nothing should ever be taken for granted, having the right knowledge and information will help you make the right decisions and can only result in success.

An existing business or franchise will have a history which can help you make decisions. Knowing this past history will help you decide which way to go to turn the company around and make it profitable and successful in the future.

Before you buy any business you should always investigate thoroughly the companies past activities, its competition, it’s current status and it’s future potential. You should always ask yourself if the product or service you offer is wanted or needed and if so what price are people be willing to pay for it.

Knowledge of the business is key

There is a lot involved in buying a business and first time buyers should be aware of this before they enter into any deal. Decisions should be thought through carefully before you make any. Make sure you have all the knowledge you need having this knowledge will help you find the right business for you. Of course there are lots of advantages to buying an existing business like it will already have its own suppliers, equipment, machinery, clients will already exist.

The amount of time and effort that you will have to put into getting the business up and running of course will drastically reduced as most of the ground work will have already have been done, a market for your service or product will already have been found, which means that finance should be easier to find. There will also be employees with experience on which you can learn from. Former owners may be willing to offer you any help you need.

Costs and Considerations

Of course there will be costs involved in the transfer of a business, such as surveys, accountants and solicitors, you may have to make a large investment in the business in order to give it the best possible chance of success, but you should remember when purchasing an existing business everything is negotiable.

You should think why is this business for sale? What negativities has it got, what does the current staff think is wrong. According to statistics a huge percentage of people who search for an existing business to buy fail to ever complete a purchase.

Things to consider when buying an existing business are:

Should you seek professional help - The advice of professionals can help you negotiate throughout the buying process. They can help you find solicitors and accountants too.

How do you do your research - You will need to know you are buying the right company for you, is the company you have chosen worth buying, you will need to verify the information you have been given, your solicitor can help you, they will also conduct local planning searches and verify relevant licenses at the land registry office.

Arranging a Loan - When arranging a loan the lender will carry out their survey and valuation at your expense, however you may wish to pay for an additional survey yourself. Lenders will want details of the business, sales, accounts for the last three years and also details of any personal assets or liabilities.

Making an offer - Any initial offers that you make should also be followed up in writing stating the term ‘subject to contract.’ In order to help yourself to become familiar with the business before you are ‘dropped in at the deep end’ so to speak, you should negotiate an overlap period when the current owners can be around to provide advice and experience.

Certain conditions have to be met before completion is reached: Financial statements should be verified, leases have to be transferred, any licences, contracts and finances have to be transferred